Needless to say, stocks around the world have gotten off to a rough start to the year. Many are attributing it to a plunge in Chinese stocks and a devaluation of the Chinese currency (yuan).
Tom Bowley, who writes the Trading Places Blog for StockCharts.com stated:
If the stock market could avoid the opening bell catastrophes, the action in 2016 wouldn’t be bad at all. Thus far this year, the NASDAQ has had net gap downs of 173 points on a cumulative basis. Trading from 9:30am EST (opening bell) to 4:00pm EST (closing bell), however, has produced gains of 1 point!
He later wrote:
U.S. futures are tumbling this morning, following the lead of its Asian and European indices. The China Shanghai Composite ($SSEC) saw its shortest trading day ever with 7% losses triggering another early close there. That has spooked global markets, despite the fact that there’s been little positive correlation between China and many of the other global indices.
So where does it leave us here in the US?
We are watching major price support levels around the August 2015 and October 2014 lows. These will be important levels to determine if we continue to be in a longer-term bull market, or if more significant decline is at hand.
Stay tuned for more analysis to follow…